I’m a big fan of buying in advance for items that I know that I’ll need. For years when my kids were little, I’d go out shopping a day or two after Halloween to buy my kids discounted Halloween costumes for the next year. I never paid full price for a Halloween costume, and after Halloween was over and the kids were done with the costume, I sold the costumes on eBay for close to the price I paid.

That’s the way I like to shop, and I know it’s how many others shop, too. After all, shopping this way is a smart strategy to stretch your dollars.

The problem is that as life gets busier as the kids grow older, I’ve found that sometimes I forget what I bought in advance. Then, I desperately go out shopping for the item I need, not realizing I had already bought it in advance.

Track Your Purchases

Case in point: Last year, right after Christmas, I bought my daughter a green ruffled dress on clearance at a steal for this year’s Christmas. But, I forgot I bought that dress, and come November, I spent a lot of my time searching children’s resale stores for a dress that wasn’t unreasonably priced. I had no luck. A few weeks ago, I was digging through some storage tubs in my closet, and I found the dress.

So this year, one of my New Year’s resolutions is to implement a strategy to keep track of all of my deals. Here are some techniques I plan to use:

Keep all of the deals in one location. I have a corner of my walk in closet where I keep a large storage tub filled with discounted items I buy whenever I see a good sale on things I’ll need later. I use these items for my kids’ birthday and Christmas presents. I have added another tub to this one. I’ll store other items like seasonal dresses in these tubs so I know everything I’ve bought in advance is in one location.

Keep a spreadsheet of gifts. Even if you keep all of your items in one location, you don’t want to constantly have to rut through everything to find what you’re looking for. Keeping a spreadsheet of the items you’ve bought in advance as well as who they are for will make it easy to see at a glance what items you have. This can also prevent you from overspending and buying more than you need.

Use the libib app to track books. I frequently give books as gifts. We also homeschool, so when I see a good sale, I’ll buy books in advance for the next year or two of school. The free app libib is a great way to keep track of your books. Simply scan the barcode with your smartphone, and you can create an inventory, even categorizing by person you’ll be giving the book to or genre. You choose.

Buying things you’ll need in advance is a great way to save money. . .as long as you don’t forget about what you’ve already bought!

Most financial experts swear by the 50/30/20 Rule. According to them, you can purpose most of your income by following this relatively simple budgeting plan. While the 50/30/20 Rule works well for most people, there are times when you may want to adjust how you spend and save money.

Once you understand how the rule works, and when you should break it, you can put yourself on the path to financial success.

Understanding the 50/30/20 Rule

According to the 50/30/20 Rule, you should divide your post-tax income into three categories:

Living expenses and essentials

Flexible spending for unnecessary expenses

Savings and debt repayment

Once you have divided your income into these categories, you should make an effort to adjust how much money goes into each one. As the rule’s name suggests:

50 percent should go to living expenses

30 percent should go to flexible spending

20 percent should go to savings and debt repayment

Why the 50/30/20 Rule Works for Most People

The 50/30/20 Rule works for most people because it encourages them to use their money wisely without forcing them to spend a lot of time and energy thinking about their budgets. You may want to spend your money in a smart way, but that doesn’t mean that you want to spend hours each week going over your expenses. The 50/30/20 Rule simplifies the process.

The 50/30/20 Rule also works well because it encourages you to set priorities. If you follow its guidelines, then you will invest money in your home, decrease high-interest debt, and save money for the future. Just as importantly, you won’t spend too much money on unnecessary expenses like going out to eat or seeing movies in a theater.

When the 50/30/20 Rule Doesn’t Work

The 50/30/20 Rule makes a lot of sense, so you should follow it if it’s feasible. The Rule, however, doesn’t work for everyone.

If you live in a city with a high cost of living, then you need to budget your money differently than people who live in cheaper towns. A recent study shows that the typical New York City household spends nearly two-thirds of its income on rent. Other cities where you need to spend more than 50 percent on housing and other essentials include:

San Francisco

Washington, D.C.

Honolulu

Oakland

San Jose

Boston

Los Angeles

If you live in one of these areas, then it’s unlikely that you can keep your essential living expenses below 50 percent of your income.

Adjusting the 50/30/20 Rule to Fit Your Life

Since your city’s cost of living affects how you spend your money, you should think about that when creating a household budget. If you spend 75 percent of your income on housing and other essential expenses, then you need to draw money away from the other two categories used in the 50/30/20 rule. Ideally, you will lower how much money you spend on non-essential expenses. That way, you can keep saving money and repaying debts so you have a secure financial future.

If you plan to buy a home, however, then you can feel confident taking some money from the savings category. You’ll essentially turn the money from savings into an investment by putting it toward the cost of your home, which you can sell at a higher price a couple of decades from now.

Budgeting is important, but it needs to fit into a realistic plan that considers your city’s cost of living. It’s a good idea to follow the 50/30/20 Rule as closely as possible, but the price of real estate may force you to make adjustments.

I teach an entrepreneurship and financial literacy elective to 8th graders. I have learned that when it comes to the topic of family or personal budgets, simplicity works best. I’ve seen all sorts of budget templates online, most of them unnecessarily complex. While adding multiple categories can provide layers of detail to a household budget, it can hide or at minimum endorse, certain expenses. I teach them to simplify their expenses budget.

For the expense side, you only really need three categories: 1) Fixed costs 2) Variable costs and 3) Non-necessities. When you add categories like, Transportation, Loans, Entertainment, Utilities, Daily Living, Housing, and so on, the budget sheet takes on a life of its own. I get it, personalizing your family budget by adding columns, headings, and colors can be a ton of fun. Not! Sure, you may have been using the same budget template now for a decade and it works for you.

As the saying goes, “if it ain’t broke, don’t fix it.” I too had been using the same budget template for several years.

Budget Template

As you can see from the picture, I had several categories and the Excel spread sheet allowed me to sort any way I needed. I’ve seen templates with a similar style, a long laundry list of fixed and variable cost items all under an “expense” column. While this may work, it’s not going to help (as much) when it comes to making a push to save more money. After teaching my students using an example, balanced budget from PwC’s Earn Your Future Curriculum, I decided to adopt this style for my family, but not just because it’s simpler.

Three Expense Category Budget

You don’t teach the skill of budgeting for the sake of your students knowing “how” to do it. You teach the skill so that they know “why” they’re doing it. So after the basics, I tell my students that the ultimate goal of a budget is to identify opportunities to cut spending. “Wasting money is stupid,” I say to them. “Plus the more money you save, the more you’ll have available to buy assets.” Yes, they know what assets are by this point.

The PwC template makes it easy for me to provide my students with an easy to grasp savings strategy. I ask, “If you were going to cut back your monthly expenses, where would you look to do so first?” This template is so intuitive. Of course the response is, “Non-necessities.” This is why I love this budget style so much. You are forced to differentiate your variable expenses. More importantly, you are showing yourself the map to future potential savings.

Budgeting doesn’t have to be a chore. And a budget should be a visual that doesn’t take an accounting degree to make sense of. If an 8th grader can’t take one look at your budget and tell you where to slash, perhaps you’re making it too hard?

According to a 2013 Gallup pole, only 1 in 3 Americans prepare a “detailed” household budget. Maybe it’s because Americans dislike being detailed? What are your thoughts on household budgeting? Please share your comments below.

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